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2017 (1) TMI 1586 - AT - Income TaxDisallowance of claim of deduction u/s 80(IA) - Inland Container Depot and Container Freight stations which are claimed to be inland port - Held that - As decided in Container Corporation of India Ltd Vs. ACIT 2012 (5) TMI 260 - DELHI HIGH COURT having regard to the provisions of the Customs Act the communications issued by the CBEC as well as the Ministry of Commerce and Industry the object of including inland port as an infrastructure facility and also having regard to the fact that customs clearance also takes place in the ICD the assessee s claim that the ICDs are Inland Ports under Explanation (d) of Section 80IA(4) requires to be upheld. Thus assessee is eligible for deduction u/s 80IA of the Act on income derived from ICDs and CFS as they are held to be inland port which is classified as an infrastructure facility u/s 80IA(4).- Decided in favor of assessee. Disallowance being registration fees paid to the Ministry of Railways for movement of container trains on India Railways - as per assessee right to ply on Indian Railways is a commercial right and therefore depreciation @25% was claimed - Held that - As Assessee has earned a benefit of enduring nature of plying on Indian Railway tracks for a period of 20 years we do not have any hesitation to hold that it is a capital asset in the form of right to operate. It is a valuable commercial right available to the assessee for a considerable long period therefore we are of the view that the assessee has acquired a commercial right which is eligible for depreciation u/s 32(1)(ii) - Appeal of the assessee is allowed holding that the assessee has acquired intangible assets which is a valuable commercial right for Rs. 50 crores and same is eligible for depreciation u/s 32(1)(ii) of the Act Addition on assets retired from active use on account of obsolescence and condemnation - Held that - As decided in assessee own case as relying on CIT Vs. Yamaha Motor India Pvt. Ltd has considered an identical issue in 2009 (8) TMI 27 - DELHI HIGH COURT as long as the machinery is available for use though not actually used it falls within the expression used for the purposes of the business and the assessee can claim the benefit of depreciation.Looking at the facts from this point of view an actual user is not required as has been contended by the Revenue - Decided against revenue Addition on termination of contracts - Held that - The facts are undisputed that the claims are unsettled as stated by the parties as the matter is pending before the Hon ble Delhi High Court against the Arbitration Tribunal Award. In view of this the matter is still not attained finality and therefore the sums received by the assessee by invoking the bank guarantee cannot be taxed as an income. The ld DR could not controvert that the claims have not reached finality and in that circumstances how the order of the ld CIT(A) is erroneous. - Decided against revenue Annual amortization of expenditure on leasehold land - Held that - CIT(A) wherein relying upon the decision of the Hon ble Supreme Court in case of Mysore Minerals vs CIT (1999 (9) TMI 1 - SUPREME COURT) the claim of the assessee is allowed. It was further noted by him that the ld Assessing Officer has not disputed the fact that the assessee has taken possession of the building used it for the purpose of business and full consideration has been paid by the company. Even before us this could not be controverted by revenue. - Decided against revenue Addition on account of income from undelivered container - Held that - Assessee has not provided any details before the ld Assessing Officer. It is also not clear whether the custom duty was paid during the year or was also outstanding at the end of the year. Further the ld CIT(A) has stated that the assessee has shown current liability the sum of Rs. 2.54 cores is liable to be refunded back to the customers. However no such details about who are those customers and when the sum has been refunded. In view of this we set aside ground No. 5 of the appeal of the revenue back to the file of the ld Assessing Officer with a direction to the assessee to provide complete details Rolling stock is part and parcel of rail system and accordingly it is eligible for claim of deduction u/s 80IA of the Income Tax Act Disallowance of depreciation on land - Held that - We are conscious about the difference between amortization of leasehold premium paid and equalization of lease charges and therefore both cannot be compared. It is also not ascertained by the lower authority whether the claim of the assessee on depreciation can be considered u/s 32(1)(ii) of the Income Tax Act or not and this fact is not available on record we set aside this ground of appeal of the revenue back to the file of Assessing Officer with a direction to the assessee to furnish the complete details of the claim of the assessee clearly bringing out the facts whether it is a claim of the depreciation or whether it is a claim of the allowability of expenditure. Disallowance of depreciation at higher rate on computer peripherals @60% instead of 25% - Held that - Now the issue is squarely cover in favour of the assessee by the decision of the Hon ble Delhi High Court in case of CIT Vs. BSES Yamuna power Ltd (2010 (8) TMI 58 - DELHI HIGH COURT) depreciation @60% on account of computer peripherals is allowed.
Issues Involved:
1. Disallowance of deduction under Section 80IA for Inland Container Depots (ICDs) and Container Freight Stations (CFS). 2. Disallowance of depreciation on registration fees paid to the Ministry of Railways. 3. Deletion of addition on assets retired from active use. 4. Deletion of addition on termination of contracts. 5. Allowance of deduction on amortization of expenditure on leasehold land. 6. Deletion of addition on income from undelivered containers. 7. Deletion of addition on rolling stock under Section 80IA. 8. Deletion of addition on depreciation on land. 9. Deletion of addition on depreciation on computer peripherals. Issue-wise Detailed Analysis: 1. Disallowance of Deduction under Section 80IA for ICDs and CFS: The assessee claimed a deduction of Rs. 81,20,83,246 under Section 80IA for income derived from ICDs and CFS, arguing they qualify as "inland ports." The Assessing Officer disallowed this claim, but the CIT(A) upheld the disallowance based on previous decisions. However, the Tribunal noted that the Hon'ble Delhi High Court had ruled in favor of the assessee in a similar case, affirming that ICDs and CFS are considered "inland ports" and thus qualify for the deduction. Despite pending appeals in the Supreme Court, the Tribunal followed the High Court's decision and allowed the deduction. 2. Disallowance of Depreciation on Registration Fees Paid to the Ministry of Railways: The assessee paid Rs. 50 crores as non-refundable registration fees to the Ministry of Railways for a license to operate container trains, claiming depreciation on this amount as an intangible asset. The Assessing Officer treated it as deferred revenue expenditure, disallowing the depreciation. The CIT(A) upheld the disallowance. However, the Tribunal, citing the Delhi High Court's decision in Areva T&D India Ltd. vs. DCIT, held that the registration fee constituted a "commercial right" and was thus eligible for depreciation under Section 32(1)(ii). 3. Deletion of Addition on Assets Retired from Active Use: The Assessing Officer disallowed depreciation on assets retired from active use, but the CIT(A) deleted this addition, referencing the Delhi High Court's decision in CIT vs. Yamaha Motor India Pvt. Ltd., which held that depreciation is allowable on discarded machinery if it was used in earlier years. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal. 4. Deletion of Addition on Termination of Contracts: The Assessing Officer treated the amount realized from invoking bank guarantees on terminated contracts as income. The CIT(A) deleted this addition, considering it a capital receipt and noting that the matter was still under dispute. The Tribunal agreed, stating that the sums received by invoking the bank guarantees could not be taxed as income until the disputes were resolved. 5. Allowance of Deduction on Amortization of Expenditure on Leasehold Land: The Assessing Officer disallowed the amortization of expenditure on leasehold land, but the CIT(A) allowed it, citing the Supreme Court's decision in Mysore Minerals Ltd. vs. CIT, which held that depreciation could be claimed on assets used for business purposes even if not registered in the company's name. The Tribunal upheld this decision. 6. Deletion of Addition on Income from Undelivered Containers: The Assessing Officer added Rs. 7.84 crores as income from undelivered containers, but the CIT(A) deleted this addition, stating that part of the amount was to be refunded to customers and part was customs duty paid. The Tribunal remanded the issue to the Assessing Officer for a fresh decision, directing the assessee to provide complete details. 7. Deletion of Addition on Rolling Stock under Section 80IA: The revenue's appeal against the allowance of deduction for rolling stock under Section 80IA was dismissed by the Tribunal, following the coordinate bench's decision that rolling stock is part of the rail system and eligible for the deduction. 8. Deletion of Addition on Depreciation on Land: The Assessing Officer disallowed depreciation on land, but the CIT(A) allowed it. The Tribunal remanded this issue to the Assessing Officer to ascertain whether the claim pertained to depreciation or the allowability of expenditure. 9. Deletion of Addition on Depreciation on Computer Peripherals: The Assessing Officer disallowed depreciation at a higher rate on computer peripherals, but the CIT(A) allowed it, following the Tribunal's earlier decision in the assessee's favor. The Tribunal upheld this decision, citing the Delhi High Court's ruling in CIT vs. BSES Yamuna Power Ltd., which allowed higher depreciation on computer peripherals. Separate Judgments Delivered: The Tribunal delivered separate judgments for different assessment years, consistently following the principles established in previous decisions and higher court rulings.
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